There are always clues.
After-action reviews nearly always identify signals that a crisis was about to begin. Small hints, tips, strange comments, or different attitudes from a customer. Something will be there. But these clues can be difficult to spot in the moment by busy in-house counsel or senior executives on the front lines of the business.
While skilled lawyers and professionals are available to support companies in full-blown crises, these teams with their cross-cutting skills are often engaged too late to shape the narrative before an all-consuming defense effort begins.
So the question becomes, how do government contractors get out in front of emerging issues, manage their risk, and mitigate as much of an impending crisis as possible? One possible answer is that systematic risk assessments and response protocols need to evolve to consider the emerging risk of parallel enforcement proceedings—to include suspension and debarment from further government contracting work—as well as the changing dynamics involved in settling a matter with the Department of Justice without a fulsome disclosure of misconduct by individuals.
Stated more directly, in today’s enforcement environment for government contractors it may be increasingly difficult to achieve a relatively quick global settlement to end a crisis. Therefore, identifying the early clues and activating the appropriate internal and external resources become ever more important to mitigating risk.
The following sets of questions are helpful when examining whether an organization is positioned to evaluate and elevate emerging issues before a crisis begins:
- How is business risk reported and tracked internally? Is it a high level risk matrix or are potential problem areas tracked with red flags gathered and analyzed periodically for broader impact? Is additional support available to assess and mitigate risks when “red flags” arise?
TIP – Not every expression of customer concern is a harbinger of trouble. However, a customer concern, a dip in employee morale, and a general inquiry from a Congressional staffer’s office may be cause for alarm. Contractors are well served to continuously evaluate the proper balance between business as usual and heightened review of risks by a cross-functional team that includes legal counsel.
- Other than the business unit, what support function receives reports concerning contract performance? Does the Legal Department sit in on periodic meetings of senior leadership to discuss business challenges? Or is it Ethics/Compliance? Or nobody?
TIP – Consistent support from a trusted legal advisor who appreciates the business needs but has the awareness to address issues as necessary can help identify emerging problems.
- For contract performance issues that are more than routine, does management review these items from a risk perspective, and are follow up questions asked to determine severity of the issue?
TIP – The questions do not need to be accusatory, or publicly asked, but regular, lawyer-led brainstorming questions with business leaders concerning other potential impacts or effects of business problems can heighten awareness of cascading impacts and potential enforcement risk. This may permit more timely recognition of problems before a crisis hits.
- Is the company monitoring employee morale? Is there an awareness of which business units are particularly stressed and may have more need for compliance support?
TIP – In an era of enhanced whistleblower protections, an employee’s incorrect understanding of reasons behind business decisions can complicate an already combustible risk environment. Employee engagement, an active ethics program, and feedback to those raising concerns that expresses appreciation for the concern and explains the analysis can reduce whistleblower actions.
Every company is different, and the pace and pressures of business are unique. Dynamic awareness of business pressures, compliance risks, and pressure points in the organization can help spot hints of an impending crisis. Qualified outside counsel can assist with developing risk management protocols, evaluating red flags, and investigating issues before a crisis hits.